Facebook Inc. on Tuesday went live with advertisements on the mobile platform in a bid to expand revenue prospects through increased marketing to smartphone users.
As of Tuesday, cell phone users will see a significant change on their Facebook page, with marketers now permitted to place ads directly into news feeds. Advertisers are also allowed to buy Sponsored Stories, whereby the company is paid for placing advertisements.
The social network giant had previously controlled the advertisement placement on news feeds and cellphones, thus making it invariably tough for marketers to aim at the mobile market.
The latest initiative helps address the company's shortcoming to boost revenue in mobile advertisements, an area where Facebook has been miserably weak at. Despite the profits the social network giant amassed since it startded eight years ago, the company seemed to make no money from advertising on the mobile platform.
"It is a major drawback to Facebook that they have been unable to monetize the mobile activity of its user base," analyst Brian Wieser from Pivotal Research Group told Reuters.
The move is critical for the company, given that around half of Facebook's 900 million users access the website on their mobile devices. It's not known whether the step may help bolster revenue, given the fact that only about one in five users have actually purchased products via advertisements on the website, a Reuters poll found out.
The company is also facing a steady decline since the disappointing downfall of its high-profile initial public offering (IPO) that fell $32 billion of its valuation. Company shares dropped over 30 percent of its initial price, down to $25.75 on Tuesday.
Meanwhile, many experts think Facebook's new initiative is a positive move. James Borow, CEO of GraphEffect, a marketing software firm, believed that marketers will be capable of distinguishing the effect on mobile ads from Facebook ads on desktop, eventually benefiting the company in the long run.
"Overnight, they are going to be the largest mobile ad network in the world," Forbes quoted Borow as saying.